Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill: policy factsheet
Published 28 June 2021
Applies to England
© Crown copyright 2021
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1. What are Material Change of Circumstances (MCC) business rates appeals?
A business rates bill is based on the rateable value of a property. Broadly speaking, this value is the property’s annual rental value.
Rateable values are assessed independently of ministers by the Valuation Office Agency (VOA). The VOA carries out frequent revaluations of every non-domestic property. In England, the last comprehensive revaluation was in 2017 and the next is due in 2023. At a revaluation the VOA updates the rateable values of business properties to reflect changes in the rental property market.
Outside of the revaluation cycle, businesses can challenge the VOA’s assessment of their property’s rateable value by making a Material Change of Circumstances (MCC) appeal. This is an appeal made, for example, on the basis of a physical change to the property or to its locality. A typical example of a change which would be considered an MCC would be the demolition of a part of a property.
2. What does the Bill do?
The government has set out that MCC appeals are not the appropriate mechanism for ratepayers to seek reductions in their business liabilities because of disruption related to COVID-19. This Bill sets in legislation the government’s commitment to rule out MCC appeals relating to COVID-19. Instead, any changes in rateable values may be reflected at the next revaluation in 2023.
3. What is the policy hoping to achieve?
Market-wide economic changes to property values, such as from COVID-19, should be reflected at general business rates revaluations rather than through MCC business rates appeals.
The process of resolving MCC appeals through the courts could take years and would create additional uncertainty for ratepayers and councils who rely on income from business rates to deliver local services.
Instead, the government has announced the introduction of a new £1.5 billion business rates relief to be targeted at sectors which have been most affected by COVID-19 but which have not been able to access business rates reliefs to date.
4. Why is legislation needed?
The Local Government Finance Act 1988 sets out the process for making a determination as to whether a valuation of a property should be carried out and, if so, the process for arriving at that valuation.
This Bill is necessary to ensure that these determinations do not take into account any matter that is directly or indirectly attributable to COVID-19.